Time and place - Barcelona, beginning of the 20th century
For many years Don Quixote's obsession with books about knights and romance have been so strong that he has irretreavibly lost the ability to distinguish between the real life and the world of fantasy. Quixote's mind has become like a huge book: he likes to linger there, in a colourful succession of dreams going through the battles with giants and encounters with the lady of his heart. Don Quixote believes that Dulcinea is the right woman who will appreciate his magnificence in love. Therefore it is decided to set out on wanderings together with Sancho Panza to find the fragile beauty and save her from the threatening dangers of the surrounding world.
A mob of people gather in the Barcelona square wishing to see and be seen. Toreadors extoll the dance of Rosita, the diva of silent films. Kitri and Basile arrive. Their love is not a secret anymore, yet their passionate relationship is not agreeable to everyone. Kitri's father desires a different son-in-law. The rich Gamache, for example, whose mother is prepared to do everything to hold a wedding for her son - even if it is against his will. The public attention has attracted the greedy Sancho Panza, who has tried to knock off something tasty in the market. Kitri together with Basile decide to sneak off taking advantage of commotion he has caused.
Kitri's father enters a crowded tavern. He reminds his daughter about her duties towards her family and forces her to become engaged with Gamache. Basile realises that he must do his utmost to change the situation, therefore he acts out a scene of jelousy. Those standing nearby even have the impression that the desperate young man thrusts a knife into his breast. Kitri hopes that at least this sad moment will make her father less cruel and selfish. The beautiful girl pledges to bless her marriage with the dying Basile. At the moment when the father gives way, Basile jumps to his feet safe and sound. The trick has worked. All the present are invited to a resplendent wedding party.
Don Quixote sees visions of giants again: a ghost who waves his arms like a windmill's sails at the ceiling seems especially dangerous. Don Quixote begins and loses the battle with the great giant, who is actually nothing but an ordinary ventilator. Failing miserably, he finally fells asleap. In his dream he is enchanted by beautiful maidens: The Lady of Driads with a large entourage. Don Quixote sees Dulcinea, who looks so much like the beautiful Kitri. The Cupid's arrow unerrigly hits the Quixote's heart.
The marriage of Kitri and Basile is celebrated with great merriment. Don Quixote comes to realise that Kitri is not the true Dulcinea, therefore he resumes his ever-lasting adventures. Surely one day one of the women whom he treats with great chivalry, will finally turn into his beloved and faithful Dulcinea without fears!